No record of MPC meet on inflation target miss: RBI

The Reserve Bank of India (RBI) has no record of what transpired at the crucial monetary policy committee meeting on 3 November that discussed its failure to meet the inflation target, the central bank said in response to a Right to Information (RTI) query.

Responding to Mint’s RTI request for a copy of the minutes of the meeting, RBI’s central public information officer (CPIO) replied on 25 January that the “information sought is not available”. Then on 17 March, responding to an appeal on the same query, executive director Radha Shyam Ratho said that “no minutes are available in respect of the MPC meeting held on 3 November 2022.”

“When the information sought is not available in the records available with the CPIO, the appellate authority, at the appellate stage, cannot direct the CPIO to procure or create the information sought and provide to the appellant,” Ratho said.

The meeting in November was prompted by RBI’s failure to meet its mandate to keep inflation within the flexible target of 2-6% for nine consecutive months between January and September last year.

Under the inflation targeting framework of the RBI Act, the central bank has to explain its failure to the government, suggest remedial actions, and provide an estimate of the period within which it will meet the target.

On 3 November, RBI said in a press release that the MPC held a meeting earlier that day to discuss and draft the report to be sent to the government under the provisions of Section 45ZN of the RBI Act. The meeting, chaired by governor Shaktikanta Das, was attended by all MPC members.

Since then, the government and the regulator have maintained secrecy around the contents of the letter. RBI had earlier said that revealing remedial measures could lead to market disruptions and cause financial market volatility, and the government cited the lack of any provision under the RBI Act for making it public.

Experts Mint spoke to were divided on whether RBI should have maintained a record of what was discussed at the meeting. While the MPC determines the policy repo rate required to meet the inflation target, writing the letter to the government is not part of the committee’s mandate and is done by the RBI.

“There were no resolutions discussed or voted on at the 3 November meeting, and that could be a reason for the lack of records. The MPC probably would have just been shown the contents of the letter prepared by the RBI, which was later sent to the government,” said a person aware of the developments.

Meanwhile, a former RBI executive, who spoke on condition of anonymity, said that while the central bank is required to publish minutes of MPC’s meetings, this wasn’t a regular meeting to look at inflation and policy rates. Regulatory institutions, the former official said, should have some amount of flexibility on what they choose to disclose in the interest of economic and financial stability.

Transparency advocates believe that since the law does not differentiate between one MPC meeting and another, RBI must maintain records whenever rate-setting panel members meet. Interestingly, since January 2020, RBI has also started disclosing sanitized versions of its central board meetings. Such reports were earlier disclosed only under the RTI Act, India’s transparency legislation.

“As per Section 45ZL of the RBI Act, RBI is required to mandatorily publish the minutes of the MPC meeting after 14 days. That they have not done so (in the case of the 3 November meeting) even after so many months suggests that this provision of law is not complied with,” said Mukund P. Unny, an advocate-on-record at the Supreme Court.

That said, Section 45ZL also says that minutes should include the resolution adopted at the meeting and the vote of each member of the committee. Given that there were no specific resolutions for voting in this meeting, others argued that minutes are not required to be recorded.